Colorado extends sales tax to electronically delivered software from 1 January 2027

What changed in detail

Colorado House Bill 26-1223, signed by the Governor on 4 June 2026 (Session Laws of Colorado 2026, Chapter 379), amends C.R.S. 39-26-102(15)(c) to remove the requirement that computer software be prepackaged, shrink-wrapped and delivered in a tangible medium to count as taxable tangible personal property, and adds a new C.R.S. 39-26-713(3) exemption limited to computer software governed by a negotiated, non-standard-form license agreement or developed for a particular user. The effect is that electronically delivered software — including SaaS and mobile applications — becomes subject to Colorado sales and use tax. Sections 2 and 3 of the act apply to the sale, storage, use and consumption of tangible personal property on or after 1 January 2027.

What it means

The prior rule turned on delivery method: shrink-wrapped software in a box was taxable, the same software downloaded was not. That distinction is gone. Sellers of SaaS, downloaded software and mobile apps into Colorado should assess exposure now — the negotiated-license and particular-user exemptions are narrow carve-outs, not a general escape route for standard subscription products, and the 1 January 2027 date is the point tax must actually be charged and remitted, not merely tracked.